Tag Archives: newsletter

EM starts the week under broadbased pressure.  We downplay reports of competitive devaluations under way because of China’s FX moves, however.  Many in EM in experiencing negative terms of trade shocks, and so their currencies are expected to depreciate.  We do not think any policymakers in EM want a weaker currency, as most are fighting to lend support via intervention and other means.   The multi-year EM boom has ended, and valuations across all asset classes are being adjusted.  This...

Chinese shares continued last week's plunge, with the Shanghai Composite off 5.3% and the Shenzhen Composite falling 6.6%.  Both indices closed on their lows.  With the apparenthelp of officials, the onshore yuan strengthened, though the real squeeze was in the offshore yuan, which strengthened by nearly 1%, the most in four months.   Excluding the Japanese markets that were closed for a national holiday, the MSCI Asia-Pacific Index shed about 1.8%.  However, a more stable tone has been...

No doubt, many people were excited on Thursday to see a spike in the silver price. The big news almost seemed like it would be a spike in the silver price. We were not quite so exuberant, tweeting (follow us on Twitter @Monetary_Metals): “What happened to silver supply and demand fundamentals this morning?!” We expected it to be a teaser for today’s Report. However, the silver market took back the entire price move, and more, in about 13 hours. Here is a close-up, showing Thursday morning...

Developments in China seemed to overshadow other considerations as investors returned from the New Year.  The offices were open and desks manned, yet many did not appear to be prepared to re-deploy resources.  The lack of participation helps explain last week's drama. Sellers showed up or were forced through money management practices (e.g. stop-losses or options triggered).   The buyers were not really on strike, but they do not often buy right out of the gate. There was the Epiphany...

Due to the holidays, the CFTC has been releasing its Commitment of Traders report late.  With this week's  report, the normal Friday release schedule resumes.   The latest report covers the shortened week through January 5.  It is not surprising to find that speculative position adjustments were minor.  There was only one gross position adjustment of more than 8k contracts, and that was the long yen. Speculators increased their holdings by half to 67.5k contracts from 45k.   What is...

A tumultuous start of the year saw the US dollar turn in a mixed performance.   Emerging market currencies and the dollar-bloc softened.  Sterling was in this camp, losing about 1.2% against the dollar.  On the other hand, the euro, Swiss franc, and the yen were firmer. Market positioning, the unwinding of short funding currencies and long risk assets, seemed to account for the disparate price action.   The pace of the slide in Chinese stocks and yuan, and the continued fall in oil prices...

1) Chinese policymakers introduced circuit-breakers for its equity markets on Monday, but then suspended them on Thursday2) PBOC finally fixed USD/CNY lower (albeit marginally) Friday after eight straight days of higher fixings3) Tensions have risen on the Korea peninsula after the North detonated some sort of nuclear weapon4) The State Bank of Vietnam has moved to a more market-based exchange rate5) Brazil’s former President Lula has been ordered to testify as a witness for a case...

The euro appears to be carving out a bottom against sterling.  This Great Graphic, created on Bloomberg, is a weekly bar chart of the cross.  We drew in the trendline off the high in H2 13.  It catches a few highs in 2014 and is testing it this week.   Last year,  the euro traded mostly between GBP0.7000 and GBP0.7500.   A triple bottom near GBP0.7000 appears to have been recorded.  This is a derivative of a head and shoulders pattern.   Although the trendline may be violated, we advise...

US grew nearly 300k jobs in December.  The October and November jobs growth were revised up by 50k.  The unemployment rate was unchanged at 5.0%, even though the participation rate ticked up.   If there was  a disappointment it was that hourly earnings did not rise as much as expected.  The 2.5% year-over-year growth from 2.3% in November.  The market had expected a 2.7% pace.  Still it is the upper end of the cycle.  Some other details were constructive.  Manufacturing gained 8k jobs. ...

For the first time this week, the PBOC set higher central reference rate for the yuan and Chinese shares rallied, with the apparent assistance of officials, after the circuit breakers were abandoned.    This, coupled with somewhat firmer oil prices, is helping to facilitate some semblance of stability in the global capital markets.   Global equities are retracing part of yesterday's losses.   In the Asia-Pacific region, Japan and Australia were exceptions.  The Nikkei slipped 0.4%,...